Dollar Price Records A Huge Slump While Bitcoin Price Pumps UpMarch 6, 2023
The dollar has performed badly against the Japanese yen in the latest trading session. Investors are unhappy about the latest activities involving the dollar in the forex market.
It has not been doing well as the investors are not making any moves to buy more dollars. The traders are simply after more clarity from the US Feds about the interest rate implementations.
Until they have a clearer picture, they may not go for making investments in the dollar. This simply suggests that the dollar price will continue losing ground against the major currencies.
The dollar will grow weaker, especially against the currencies that are sticking to the interest rate hike policies, such as the Japanese yen.
Dollar Faces a Crash
Just a few days back, the value of the dollar was at a 1-month high against the major currencies. Now, the situation is exactly the opposite.
The recent trading week has shown that the dollar price has only continued to weaken against the major currencies.
It has recorded the largest weekly loss that it had incurred back in the month of January. The DXY has also recorded the worst weekly performance since January against the major currencies.
The traders have now stepped back from supporting the dollar. They want to see exactly what passage the US Feds are going to lay out for the monetary policy going forward.
If their decision is positive, then the dollar trading price will continue gaining strength. However, if the interest rates are paused or lowered, then it would be a completely different story for the dollar.
What Strengthened the Dollar?
Since June of 2022, the dollar continued growing in power against all major currencies. It was because of the decisions that the Feds had made about the monetary policy.
They kept increasing the interest rates, which eventually pushed the dollar price higher compared to other currencies.
The US was the first-ever country to implement interest rate hikes to fight the rising inflation rates. Its strategy worked out well and the dollar kept growing in power.
It took months for other countries to follow the same policy but the dollar had already gone out of their reach.
Japan also faced a similar problem as the US did but it had its own way of dealing with the weakening yen price.
Instead of increasing the interest rates, Japan resorted to intervention by throwing away billions of dollars into the market.
Initially, the yen gained support for doing that but it was not a long-term solution. Eventually, Japan had to resort to the monetary policy of interest rate hikes.
Ever since Japan started to implement interest rate hikes, the yen has continued gaining strength.
However, the dollar has kept losing power against the yen because the Central Bank of Japan has been implementing higher interest rates than the Feds.
Dollar Price Index
The latest market data shows that the dollar price index has steered downwards in the recent trading session. The DXY has reportedly fallen by 0.3% in the latest session, getting pulled down to 104.60.
Prior to the demise, the DXY was at a high of 105.36. This was the strongest level that the US dollar had hit since January 6.
In the latest session, the trading price of the dollar has eased by 0.4% against the yen, moving down from a high of 137.10 to a low of 136.26.
The euro price has also recorded a 0.3% surge against the trading price of the dollar. The sterling has surged by 0.7% against the dollar price, moving up to $1.2032.
Under normal circumstances, as the dollar price moves downwards, the crypto prices move higher. This time, Bitcoin and altcoin prices have moved downwards due to the Silvergate Bank controversy.
The value of Bitcoin has dipped by 4.9% against the dollar as it has moved down to $22,306.
Editorial credit: Valeriya Zankovych / shutterstock.com